Kerala State Financial Enterprises Ltd Vs Union Of India (Kerala High Court)
Kerala High Court held that amount of interest received by the foreman of a chit on defaulting subscriptions cannot be said to be amounts received as consideration for the supply of services. Thus, the same is not leviable to GST.
Facts- The petitioner is a company incorporated under the Companies Act, 1956, and is wholly owned by the Government of Kerala. It is primarily engaged in the business of conducting chits. It is before this Court challenging show cause notice dated 21-04-2022 inter alia calling upon the petitioner to show cause as to why Goods and Services Tax (GST) amounting to Rs.61,55,21,173/- should not be demanded and recovered under the provisions of Section 74 of the Central Goods and Services Tax/State Goods and Services Tax Acts, 2017, (CGST/SGST Acts), as to why interest should not be demanded on the aforesaid sum and as to why penalty should not be imposed in terms of the provisions contained in the CGST/SGST Acts for violation of the provisions of the law.
Conclusion- It is clear that when the amounts received by the petitioner that the Revenue asserts are consideration for services are actually consideration represented by way of interest for extending deposits, loans, and advances, the transaction would not be subject to any rate of tax in terms of Notification No.12 of 2017.
